Feeling Left Out

Iraq Seeks Return To World Oil Party

BAGHDAD, Iraq — Like a teenager who speaks disdainfully of the senior prom after failing to get a date, Iraq insists that the ocean of oil it sits on eventually will bring the world to its door.

It's far from clear when the knock on that door will come, but for the day it does, Iraq is primping on a huge scale.

The regime in Baghdad is drilling thousands of new wells, rebuilding war-damaged refineries and tank farms, forging new industry-university links to extend the research it used to buy from foreigners, and generally letting the world know that if it wants to party, Iraq is available.

After the tumultuous Organization of Petroleum Exporting Countries summit in Vienna this month, the man who wasn't there-Iraqi oil minister Osama Abdulrezak al-Hiti-said, "I really was not interested in attending at all.

"It's so funny. The allocation figures they're jiggling around are unrealistic, and I don't expect that anybody will observe them," Hiti said in his first interview since the four-day OPEC session.

Hiti, a 1967 graduate in petroleum engineering from Louisiana Tech University near Shreveport, is not alone in that view. Many industry analysts, citing the squabbling at the meeting and the poor record of OPEC members in observing production limits they've agreed to, doubt that they will do so this time.

After squashing Kuwait's plea for a higher quota to help it pay for repairing $50 billion in Persian Gulf war damage, OPEC agreed to pull nearly 1.5 million barrels of crude a day off the market as of March 1. It set a new production level of 23.6 million barrels a day for the cartel through June.

"You know what they did? They dropped our share to 400,000," Hiti said, chuckling grimly. "It's so unrealistic. They're trying to come up with a ceiling that nobody is going to buy-just publish some figures so they look nice."

Iraq is an 800-pound oil gorilla, though one tightly tied down by the UN embargo imposed on its oil exports in 1990, after it invaded Kuwait.

If the export ban were lifted today, Iraq could export 1.5 million barrels daily, American oil industry sources said.

Before the gulf war, Iraq was producing 3.8 million barrels a day. Current production capacity, because of war damage and lack of upkeep, is down to about 2 million barrels daily, the U.S. sources said. Hiti contended that it's already at least 2.5 million barrels a day and will surpass 3 million this year.

Iraq's refining capacity is estimated at a paltry 450,000 barrels a day by the U.S. industry sources. Hiti put the figure at 505,000 barrels.

But he insisted that all those figures add up to nothing more than a temporary irrelevance against Iraq's reserves of 110 billion barrels of oil. That is about 10 percent more than OPEC estimates. But it's still the world's second-largest oil pool, though far behind Saudi Arabia, which has 260 billion barrels.

Iraq is forging ahead with plans to build its oil-producing capability to 6 million barrels a day by the end of the century, he said. But with a global glut at the moment, Hiti was asked, who would buy it?

"In the coming few years, a lot of countries are going to cut back production simply because they don't have the capacity to continue (at current levels)," Hiti said. "I expect that some of their fields are going to drop off sharply, so there won't be very substantial growth.

"Besides, when we say we will have that production capacity, that doesn't mean we will market all of it . . . although I expect we will market as much as possible."

There's no question whose rosy vision Hiti is expounding. In the waiting room to his office, there are no less than eight photos of Iraqi President Saddam Hussein.

Before the gulf war, Iraq's oil revenue was roughly $15 billion a year, accounting for more than 90 percent of its foreign exchange. That has plummeted to no more than $500 million, according to a recent report for the U.S. Defense Department written by Patrick Clawson of the National Defense University in Washington.

Much of that comes from the 50,000 barrels of oil a day the UN allows Iraq to sell neighboring Jordan at cut rates in repayment of debt. The 650-mile highway from Baghdad to Amman, Jordan, through bleak, inhospitable desert, is clogged with tank trucks daily. A price differential of $2.20 a gallon between Iraqi and Turkish gasoline prices also encourages smuggling into Turkey.

That's a drop in the bucket for a nation that contends it will drill 5,000 to 10,000 wells in the next few years to tap what Hiti called "big, huge, data-proven new fields" in Iraq's southern and western desert regions.

"I haven't heard of many giant fields like we have," Hiti said. "Some of them are under development now, and we can bring them on-stream in a matter of not more than two years."